Ad for Chiffon Margarine

Mother Nature, I-Gaming and Casinos

Andrew D Ellis

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Do you remember that wonderful ad for Chiffon margarine? It ran in the ‘70’s and featured Dana Dietrich as Mother Nature who is angry for having been fooled by the buttery taste of Chiffon margarine. To see it again, click here:https://www.youtube.com/watch?v=e3QAHfvzu14

While we could all use a good giggle, especially in these days, it is important to see what will be happing to the casino and I-Gaming industries. For several years now, industry pundits have been predicting that I-Gaming would eventually overwhelm brick and mortar casinos as preferred gaming venues. After all, there are now over 165 million “gamers” in the US and only 35% of the American public (approximately 122 million) goes to casinos each year. And yet, as of the close of 2019, the American Gaming Association’s annual State of the States report suggests that I-Gaming, as a form of gambling, is legal in the fewest number of states compared to virtually all other forms of gambling. In my opinion, that is about to change.

The coronavirus might just as well been named the casinovirus as casinos around the world were the first to be closed and will be the last to re-opened. The immediate closure of casinos is the easiest to understand: thousands of people congregating indoors with the least socially beneficial objective — gambling! The long-term closure of casinos will also be easy to understand: it will take a long time for enough people to want to spend scarcer leisure dollars to justify the break-even expense of re-opening them. In hindsight, it will be obvious that middle class participants in the consumer economy, the demographic that most populates casinos (i.e., people making between $35,000 and $100,000 per year), will be the most hard-hit by the emerging pandemic. (Their available leisure dollars will be comparatively “scarcer.”) And, I-Gaming, much of which can be characterized as skill games by state and local governments eager to increase tax revenues, will be easiest to access and the least expensive to offer as alternatives to casino gambling.

Again, in my opinion, here’s what you can expect: multiple defaults by issuers of bonds backed by casino revenues coupled with aggressive state and municipal efforts to enable casinos to offer a multitude of I-Gaming offerings that integrate gambling features. States and municipalities need casinos to make money and pay their bond obligations; they are indifferent to the source of revenues and/or the profitability of casinos. As for casinos themselves, expect them to shift much of their physical assets to long-term residential properties to meet the down-sizing demand of an aging population that is growing by leaps and bounds. In my view, these changes would have happened but the coronavirus accelerates the trend. Stay tuned.

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